Property Letter 16th June 2009

PROPERTY LETTER 16th June 2009.

WHAT IS THE PROPERTY MARKET DOING ON THE COTE D’AZUR?

Everyone wants to know the answer to that question, and I can relate what I see in the marketplace, and what I’ve heard or read.

Internationally it is becoming accepted that we are through the worst. Britain has officially returned to growth (the recession therefore is officially over) although recovery will be slow and unemployment will continue to rise, and businesses will continue to close for another year or more. Europe is likewise returning to growth. Mortgage lending is on the increase in the UK and France, and house prices are edging upwards. The pain is far from over, but there is hope again.

This quote is from Edmund Conway writing in The Daily Telegraph on 10th June 2009:

“The recession is almost certainly over. The economy will return to growth imminently, if it isn’t doing so already. The evidence surrounds us: surveys show that the services sector, worth three quarters of our national output, is growing again, and it emerged yesterday that the manufacturing sector is doing the same. Having slimmed down, and cut costs and inventories, companies are making money once more; banks are even starting to lend more freely to households and businesses.”

Locally:

Cannes and the French Riviera are not “the rest of France”. They are an entirely different market, driven by different forces, and answering and subject to different dynamics.

In France property prices contracted 5% in the first quarter of 2009. I can confirm that the volume of sales was extremely low in Cannes, and that prices here are likely to have contracted too, for the simple reason that the only sales were fire sales.

When you look at the properties on offer today (and featured below) you will see that asking prices are generally similar to those in the third quarter of last year when international markets went into turmoil. I have highlighted some notable exceptions because there have been and there
still are some very attractive offers to be found, and we have been lucky to be able to take advantage of some of them – however it would be wrong to think that the market is flooded with cut-price property. There may be some, but generally sellers are holding on for an improvement before putting their properties on the market and in this part of France people can afford to wait.

In staying the same for a while, prices have become more attractive – and this might be interpreted as a de facto price contraction. Certainly that is how sellers see it.

There is pent-up demand which is beginning to be felt as we are experiencing significantly increased enquiries and sales, and there is pent-up
supply which is also beginning to be seen as more product comes onto the market.

So where does that leave us?

This is not a speculators market although there are opportunities sometimes and we look for those, and try to put clients together with them when
we find them.

The property market here is generally mature. It has been an investment destination of choice for people looking for the good things in life since ancient Greek and Roman times, but in more recent times it has been extremely popular since the Victorian and Russian aristocracy flocked to the French
Riviera before the turn of the 20th century.

Strong demand has fuelled price escalation in recent decades but it has been sensible price escalation, largely because credit has never been a large part of French culture, and French banks have not issued credit based on anything but an applicant’s ability to repay through his regular proven income. (They will not take into account future or projected income to the frustration of many, but doesn’t that seem to have been a sensible policy in the light of what happened?)

May I remind you of what I wrote in a Property Letter in February of this year?

French household debt as a percentage of GDP 47.5%

USA household debt as a percentage of GDP 98.2%

UK household debt as a percentage of GDP 103.5%

(2007 figures)

All things considered the market is coming back to life, and we are busy again

WITH SOUTH AFRICANS IN MIND (and apologies to everyone else)

We are seeing a significant rise in the number of enquiries from South Africans in spite of the recession. This must be partly because we have worked hard to spread the word about property on the Cote d’Azur amongst South Africans for seven years now, but only partly.

I think other factors are also at work:

The Rand is very strong and if ever there was a time to consider externalising funds and investing them in safe managed property it must be now. Combine that with static if not slightly depressed property prices on the French Riviera and the combination is, one might say, a “no brainer”.

Most South Africans we meet quiz us on investing in property offshore.

Three topics that always come up are Zimbabwe, Zuma and Crime, and the thought that perhaps – just maybe – it would be possible or wise to
establish a little nest-egg (if not a bolt-hole) abroad.

Almost without fail people want to know that we will be on the ground in France in the long term, to help through the process of purchase and to be there for them when their transfer is through – to keep control of their administration, management and rentals. That is exactly what we do.

Greeff Properties.

On our most recent trip home to Cape Town in April Vicky and I were privileged to be introduced through friends to Mike Greeff. Mike and his team believe in personal service as we do, they talk to their clients and rank them as friends and colleagues, and value long term relationships with them.

Vicky and I were afforded the opportunity to meet and speak to the team at Greeff Properties at a Friday morning meeting, and to explain to them what we do in France, and discuss ways in which we can work together in the future.

We are excited about the prospect of raising awareness of the opportunities we can offer South Africans in property in France, through Mike and his team, and likewise to spreading the word through our network of the opportunities that Greeff Properties have to offer in the spectacular Southern Suburbs of Cape Town. Knowing how they work now, I also know that nobody is going to do a better job for our valued friends and colleagues when they have property business in the Cape than Mike and his team.

THE DEPTH AND THE BREADTH – FROM BED-SITS TO VILLAS.

Vicky and I started here over seven years ago as dispossessed Zimbabwean farmers needing to build a new life after losing everything back home. Our need at that time and that of farming friends and family was to find affordable (mostly small) rental units which could start to generate income, and above all build value.

The Property Letter was born, and the first one in April 2002 went to less than 20 people who had expressed interest in what we were trying to do – or who were so close to us as friends or family that they got the letter anyway. They had no choice!

Today the Property Letter goes to many hundreds of interested people and we don’t know you all personally any more unfortunately, but the basics have remained the same. We work to identify worthy properties and we distribute that information through the Property Letter network, entering into personal communication as soon as someone begins to show interest in something in particular. We are here to help with every step.

Of course we are now aided by our website, and I sometimes ask myself if the old Property Letter is archaic. Should I abandon it and move with the times? When ever I suggest it I’m told that I must carry on….so I will do so as long as it is relevant.

My problem: We now have a very wide spectrum of interest, from people just starting out to people who are looking for their “dream home” on the French Riviera. There are some for whom an investment in a rental studio is a very big leap and commitment, and others who have long since found their security, and are now looking for some well earned enjoyment of the fruits of their labour.

The first group is likely to perceive all the “fancy villas” and “expensive penthouses” as irrelevant at best and quite possibly annoying. The second is likely to flip through all the little studio apartments and lower budget offerings with impatience, because for them they are a waste of precious time.

There is a place and a genuine need for both, so we will continue to cover all the bases, but I will send out a separate Property Letter in the coming weeks covering “Just Villas”.

I hope that is part way to a solution, but the “luxury portfolio” (for want of a better description) might well evolve on its own, and become separate over time.

As always, please let me know if you would rather not receive these Property Letters and I’ll remove your address from the list.

You might remember this beautiful building.

In answer to the commonest question these days, “Are prices coming down?” I normally answer “It depends” or “Some are.”

This one has!

La Croix des Gardes, Two bedroom apartment.

Isn’t she a beauty?

100m² of living space.

3rd floor of 5.

Construction – late 19th century.

Exposition – full south, east and west.

View – across gardens to a panoramic sea and the
Esterel Hills in the west.

Balconies off all rooms.

Asking price WAS 867 000€.

Asking price NOW 760 000€.

Just west of the centre of Cannes and rising slightly above it is a suburb called Les Croix de Gardes. It is a lovely and quiet old suburb with some gorgeous old buildings and Palaces, and this is the best of those.

The apartment is on 3rd floor of the building on the eastern corner.

The building itself is grand and historic and of course protected, but parts of the interior such as passages and stairwells require some attention, and this work has been voted for and paid for. Some of the photos show the vast and ornate period entrance halls. The gardens are extensive and well maintained. The view (full south) is stunning and panoramic of the whole Bay of Cannes to the Esterel Hills in the west, where the sun disappears. The classic low building in front (also visible in some of the photos) is the Rothschild Villa which is also protected (listed as an important historic building) so the view is
guaranteed for ever – nothing may go up for 500m on either side.

The apartment has a large entrance hall, a big living room and two bedrooms both opening onto balconies, and the magnificent view. All of these rooms have the original moulded cornices and moulded ceiling medallions for chandeliers. It has a very large main bathroom and separate shower and toilet, a large equipped kitchen and a second toilet. There is ample space to enclose the area leading to the second toilet in order to create a second bathroom, and the plumbing is already in place. That is the only work that is recommended or necessary, and it is minimal.

The living space is 99.7m²

The balcony runs all along the front and each bedroom has access. It is not a wide balcony as they were not in these grand old buildings, but it is quite wide
enough for table and chairs.

The property has a reception area, a guardian and security.

Parking is free within the grounds for residents and there is a large cellar in the basement.

This property has all three important elements which distinguish a “high grade” or “luxury” apartment:

The selection offered represents a few properties chosen from many, so if what you are looking for is not here, we can tailor-make our search for you.

Please remember that if you follow the links you will be able to read about the properties, look at a gallery of photos, and look at the position of the properties on a map.

There are more good apartments for me to describe but I can’t keep up! Also if I add too many the Property Letter will be very big, and I may never finish it. So I will add a few “skeletons” of properties (in price order below – in green) which I will write up soon, and they will feature in another Property Letter in the next few weeks.

Montfleury.

Studio apartment.

23m² of living space.

3rd floor of 7.

Construction 1975.

General state of the building – excellent.

Good North West facing balcony.

View of gardens, suburbs and hillsides.

Asking price 158 000€.

This is a little apartment just out of the centre of Cannes in the pleasant and popular residential suburb of Montfleury. It is small, but will rent to young people starting out in life, and this studio has plenty going for it. The building is excellent, with a guardian, it is close to shops and commerce, and has been entirely renovated. It has a small entrance with the shower and toilet leading off it, and a main room with open plan equipped kitchen leading to a very pleasant balcony of 6m². There is no other building overlooking, so the views are unobstructed and very appealing, and the apartment very light and bright.

There is a cellar in the basement and open parking attached to the residence.

This has no merit for conference rentals, being just a little too far, but is a good starter property for residential long term rentals. I suspect that reasonable offers would be considered.

This is a charming and spacious one bedroom apartment right on the Rue d’Antibes, the principal and most famous shopping street in Cannes. It is however a single lane road running from east to west, parallel to La Croisette, and in effect carries huge volumes of pedestrian traffic and little and very slow motor traffic. The position just a block from the beaches and the Croisette, close to the Palais des Festivals, and set amongst some of the most notable shops, restaurants and night life in France makes it a marvellous position to own a rental apartment. It is also a fun place to spend weekends or short holidays which is what the UK sellers have used it for, between rentals, the last five years.

The apartment consists of a spacious living room and bedroom, a nice big bathroom with shower, and separate toilet, and a surprisingly large kitchen with a dining table for six easily and comfortably within. (Most kitchens we see don’t have the space for a table for two, never mind six). At the front of the apartment is a pleasant balcony overlooking the
Rue d’Antibes from the 3rd floor – the view is constantly fascinating. Both the living room and bedroom open onto this balcony, and the kitchen opens onto a back balcony with a scruffy view of the backs of buildings. It is nothing to get excited about, except that it allows a free flow of air right through the apartment which is always an advantage, and it’s
somewhere to hang the washing.

The building itself is a century old Bourgeois building, set amongst others of the same character. Look at the photos of the view across the street! It is a charming view – this is real France and Vicky and I think these buildings are beautiful – such style, such class. The entrance is a bit run down; however the renovation of the entrance and common areas has been “voted” for at the AGM and is scheduled for this year, and has been paid for so the buyer of this property will not be hit with the bill but will reap the benefit of the revamp. This is good news. There is a small lift squeezed into the space in the centre of the staircase. It’s amazing what they get a lift into in these old buildings.

The apartment is being sold completely furnished as you see it in the photos. Everything is included.

This is a great rental property and Vicky and I immediately had confidence in it.

This quality building is in a block which is on La Croisette, in the second row. The apartment traverses the building with balconies off the living room on the east side and off the bedrooms on the west side with (small) views of La Croisette and the Port Canto between the handsome buildings which form the front row. The apartment has been completely renovated and is sold attractively furnished and ready to go – a very attractive and important opportunity.

It has a bathroom with toilet, and a separate shower and toilet. All rooms are air conditioned and it is double glazed.

The kitchen is modern and open plan to the living room, and the apartment is being sold fully furnished. It is ready-to-go as a rental unit, or as a second home and for holidays.

In the gardens of a 100 year old villa in the centre of Cannes low apartment buildings were created incorporating beautiful and spacious gardens and a pool. The complex is quiet, secure and residents have the exclusive use of the gardens and pool area. The villa itself now comprises four luxury apartments. We have a two bedroom and two bathroom apartment on the first floor of one of the new residences on offer. It has lovely garden and pool views and is quiet. The living area is very spacious and the apartment has been fairly recently renovated, and is being sold furnished.

There are valuable options however:

Opening up the kitchen and hall to bring them into a greatly enhanced living area, and renovating the bathrooms while giving the apartment a freshening to raise it from a quality two bedroom and two bathroom product to a luxury one.

An alternative option is to create a third bedroom and en-suite bathroom by incorporating an open-plan kitchen into the living room and hall. The very large separate kitchen then would make a light and spacious bedroom with good west-facing windows, and the pantry would become the en-suite shower and toilet. (This to me is the best option of all, especially if rentals are to be considered in the future.)

This apartment is priced to sell, and is so close to the centre of Cannes, its main shopping streets and the beaches that it is eminently rentable for conferences, and so quiet that it can be a lovely home or second home. It has a garage in the basement, and a spacious cellar for storage. It has everything.

This apartment in a small gated residence is on the ground floor and has a 90m² private garden leading down a quaint footpath between shrubs, lawns and rockery to a garden gate leading out to the greater well maintained communal gardens.

It is a spacious apartment with an entrance hall leading to a lovely light living room, and two bedrooms with bathrooms and toilets. The apartment traverses the building so that both bedrooms open onto a large enclosed back balcony with generous cupboards, and a view of gardens. There is a guest toilet, and an equipped kitchen which, like the living room, opens onto a south west facing terrace with ample (brand new) awnings. From the terrace the garden is both quiet and most attractive with well established trees and lawns.

The floors are marble, shutters and awnings are electric, cupboards in bedrooms, bathrooms and the back enclosed balcony are generous, and there is common parking in the residence.

This apartment is an ideal longer term rental prospect (+/-2000€) – it is a home or a second home rather than a holiday flat. Quiet in the very sought after suburb of Montfleury just five minutes from Cannes, it should not be at all difficult to rent, nor to keep as a second home if this is what one is looking for.

The price is attractive and there is little to be done except a few (inevitable) cosmetics.

Place Vauban.

Four bedroom apartment.

Living space 156m².

2nd floor of 3.

Construction – 1909 (Bourgeois).

Aspect – east, south and west.

Views are of similar historic buildings and a leafy
boulevard.

Balconettes.

Asking price – 617 000€.

(Negotiable)

We have no other apartment in Cannes with four bedrooms, or with this vast expanse of space. Add to that its position which is on an historic and leafy boulevard just five minutes on foot to the Palais des Festivals, and the asking price (before any negotiation) of less than 4000€ per m². You have a heady mix of plusses.

The Classic Boulevard The Building

The three storey building is built in grand style, and all the buildings down both sides of the boulevard are similarly grandiose. Many facades have been renovated to mint condition in the seven years we have been here and the effect is uplifting.

Views through bedroom windows

The entrance to the building is not on the boulevard, but comes off a gated leafy courtyard, the staircase is grand as you’d expect and there is a lift.

On the second floor are two apartments. The one we are looking at was owned by a doctor who ran his practice from there for many years, then retired to live there for the rest of his life. He was averse to any sort of disruption, especially cleaners or workmen, and hence his living conditions and the condition of the apartment deteriorated over a period of a few decades! You can imagine. Only one lady looked after him, and he was so grateful to her that he gave her the apartment opposite him, and she is there today. It is she that looks after the keys and shows the apartment when we visit. It’s a nice story, and she’s a very kind and helpful woman.

The apartment itself has a large entrance hall, and very high ceilings throughout. There are two main rooms, one a dining room off a separate kitchen, and the other a spacious living room with lovely moulded and entirely undamaged cornicing at ceiling level. There are three spacious bedrooms but typically (of the time) only one enormous bathroom, and a separate toilet. Through modern eyes and with a view to maximising the potential (while retaining all of the character) we would envisage creating two more bathrooms, and turning the dining room into a master bedroom with the old kitchen becoming the en-suite bathroom. Thereby we would arrive very easily at a situation of four bedrooms and three bathrooms, still with a vast and lovely living room. Obviously the new owner will have his or her own ideas, but there is ample potential.

The renovation need not be enormous because the windows are already double glazed, and the floors deserve special mention. In the bedrooms the traditional red-brick Provencal tiling is undamaged because it’s been covered by wall to wall soft carpeting for many years. In the entrance hall are traditional period white and blue ceramic tiles, in the bathroom is granite and black, and the living room and dining room (master bedroom) are pristine old wood. Therefore the floors and windows need little work. The bulk of the renovation will be on electrics and plumbing, bathrooms and kitchen.

We have considerable experience in renovations now, and it is safe to estimate that a complete renovation to a very high standard will cost 120 000€. That still leaves the finished cost of this apartment at under 5 000€ per m². Frankly that is phenomenal.

I am so often asked by people “can’t you find us something really good that needs renovation, which we can add value to?” Well, here it is!

85m² of living space.14m² of south west facing balcony.Views of sea and La Croisette gardens and palm trees.1st floor of 7.Construction – 1975.Asking price – 1 150 000€.

This is a beautiful apartment.

It has been recently renovated to an exceptionally high standard in one of the most beautiful residences in Palm Beach. In fact it dominates the entrance from La Croisette into Palm Beach, and the views from the apartment across the gardens to Bijou Plage (Jewel Beach) just 100m away are magnificent.

Bijou Plage is a favourite for people wanting to be a little away from the glitz of the beaches right in the centre of Cannes, the restaurants on the beach are renowned for providing the most wonderful ambiance and food (light meals, or full), and it also has one of the few “handiplages” in Cannes with wheelchair access to the water and rest rooms to suit.

Springtime at Bijou Plage

The renovation of this apartment was complete and included new floors and restored moulded ceilings, stucco paintwork, new bathrooms, new kitchen, plumbing and electrics. New lighting and air-conditioning. New double glazing and awnings. All shutters and awnings are electric, and there is a lift of course, a full time resident care taker in the building, dedicated parking and a very clean and substantial cellar.

One enters through a lovely entrance hall with concealed lighting, and into the vast living room with a view straight out and over the gardens to the sea. Each “coin nuit” is separate and via a private passage to the bedrooms, one with a bathroom and shower and toilet, and the other with shower and toilet. There is also a guest toilet.

The apartment is being sold furnished, absolutely as you see it in the photos – ready to move in.

For someone this is a dream second home, and one capable of earning substantial rental income annually from top-flite visitors to help offset the costs, if desired.